Disappointing first half results at financial outsourcer Xchanging (XCH)  and the retirement of chief executive officer Ken Lever prompt a heavy sell-off in the company’s shares. Xchanging stock trades 22% lower at 99p and is down 37% year-to-date.

‘Xchanging has reported disappointing first half results that are weighted down by a poor performance from the Procurement division despite a solid performance from Business Process Outsourcing,’ writes Investec analyst Alex Paterson.

XCHANGING - Comparison Line Chart (Rebased to first)

Adjusted operating profit, at £20.4 million, was only slightly short of Paterson’s £20.6 million forecast. Investors are instead focusing on a £6.8 million loss in its Procurement division, which aims to help commercial customers source products more cheaply and streamline processes.

In light of this worse-than-expected performance, Xchanging has written-off intangible assets in the unit by £47 million, a non-cash charge.

The write-down is a blow to Xchanging’s acquisition-led strategy. The Procurement write-down relates to a historic acquisition rather than the more recent deals including the $22 million (£14 million) 2013 deal to buy customer support firm MM4 and an $11.5 million purchase of spend analytics specialist Spikes Cavell in February this year.

Issue Date: 30 Jul 2015